A recent report appeared to suggest that Millennial investors are holding more cash and bonds than older investors.
In theory, they shouldn’t be holding as much as 45% of their investments in cash and bonds. According to the Rule of 100, they should be allocating around three quarters of their investment to shares, which means that only 25% of their investments should be in cash or near-cash investments such as bonds.
Perhaps it is that higher prevailing interest rates are influencing their decision-making. After all, why would anyone want to take on market risk when they can earn a risk-free return of around 4%? It is a fair question.
For many Millennials, a 4% interest rate on their savings is something that they had only heard about from their elders. It probably isn’t something that they ever expected to experience in their own lifetime. So, why look a gift horse in the mouth?...